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Need The Opinion Of Others For My Purchase

Discussion in 'Model S: Ordering, Production, Delivery' started by Bardlebee, Dec 15, 2013.

  1. Bardlebee

    Bardlebee Member

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    Disclaimer: I realize any and all financial opinions/advice given here are from strangers on the internet who could be posing to know what they are talking about. I am just looking for another side of the coin. :)

    ---------------------------------

    Hello Everyone!

    You may have seen me on these forums before. I have been on here for more then a year and I watched as everyone got their Model S and enjoying the hell out of it. I am going to be taking my FIRST test drive in 12 hours and putting in my deposit next month FINALLY!

    However I am having second thoughts financially and I was wondering if anyone wanted to weigh in on a "What would you do?" sort of conversation. To give you background, I am 28 years old, I work as a network engineer at a very nice company which pays me well. I live in San Antonio, TX which has low living costs in housing and all that.

    The reason I am having second thoughts on buying the Model S I think stems from most of my friends/family saying "Well, its an awesome car! But its so EXPENSIVE". I am adverse to debt and I am very careful with finances and that is partially why I am nearly debt free. I only have my house, which is 140k.

    I invested enough in TSLA to in total have 80k in stock total. This is probably the main reason I can afford to put 50k down on the car. But with all my friends/family reminding me that I am not making a metric ton of money it has me second guessing my financial decision here. To be clear, the monthly expenses are not what frighten me as I would have to finance the other 40k. I make more then enough to pay for this monthly and have plenty of money, 70 percent roughly, left over to pay extra on the car AND my house at the same time. My concern is.... with this much in stock I could literally almost pay off my house.

    I just don't know when I will see this much cash in a long time so I am on edge. Since I am so young, I am looking at my future. I love the car, I love EV's and I can't stop searching the web 24/7 on Tesla news. It is definitely a passion, but my frugal side is also pulling me. Its a brain vs. heart moment right now.

    Anyone have any thoughts on my dilemma? I know opinions will be skewed on this forum FOR getting a Tesla. But sometimes I like to make sure I am not TOO crazy. If you need more info on my finances, I can share. I just don't want to offend anyone on the forum for sharing my own finances.

    Sorry this was so long :)

    TL;DR: I can afford the car, but wonder if financially its the best choice to use all this gained cash on a passion or a frugal investment. Also, I don't feel like waiting till Model E and I would like a vehicle in this class.
     
  2. Mnlevin

    Mnlevin Member

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    #2 Mnlevin, Dec 15, 2013
    Last edited: Dec 15, 2013
    My profession is Financial Planning. I can tell you from the start cars are luxury items. There are probably no cars out there that will do anything to enhance your financial situation. Every car is an expense item, so it is impossible to justify the purchase from that standpoint and usually I would tell a young person to save their money. You could be 100% practical and purchase a Corolla or Civic. You could be impractical and purchase a BMW or Corvette. You will certainly be splurging if you get the TESLA. But now you can justify it this way, if you look at marginal costs,(the difference in cost over any other purchase) over a 5- 7 year period against any other consideration and understand that is the splurge factor. You will be taking a lot of your cash reserves to accomplish this so it then becomes a personal decision. I am much older and would never have considered a luxury purchase at your age. You also can be 100% practical and wait for the Gen III which would be more in line with what your budget would allow in a few years, or pay cash with that $50k.

    BTW, I would sell that TSLA and put the money away for your purchase. I love the car, love the company but dont think the stock price is justifiable and will someday drop considerably. Take the money and run
     
  3. Bardlebee

    Bardlebee Member

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    Thank you for your input! I agree any car is definitely an expense that is not an investment. Currently I drive my mustang and if the Tesla didn't exist I would drive it until it couldn't drive anymore because I am not passionate about vehicles. I am passionate about EV's, and maybe that doesn't make a whole lot of sense, but it does to me. :)

    In any case, if I purchased the Model S, I know in my heart I would not replace it with anything new any time soon. Like the Mustang I would likely drive it for 10+ years if I could get that kind of time out of it. I don't like buying large items if they don't make financially structured sense. I think to myself "Self, you could put that 50k into your retirement!" but then my heart counters "You could also put more into your retirement now per month".

    I certainly don't take for granted to being able to even consider the Model S at my age. I have always looked to others who have been there before me to weigh what large choices I have in front of me. There is a lot you can learn from those who are successful and have been there. That is how I am in this position. :)

    I am still torn. I feel that once I drive it later today I will want to buy it so I am glad I have a month or two of waiting (my last few checks of saving for the car) to really step back and decide. Because I have been passionate about this car since the Roadster was new, it may be hard for me to see clearly.

    I look forward to hearing more input.

    EDIT: I guess I should add I am married and my wife also has a position in the same field. So the money is there monthly. Its just the large cash point that keeps me on edge. Monthly wise I think I could pay this car off in two years, instead of the 7 year financing I would be doing.
     
  4. SwedishAdvocate

    SwedishAdvocate Active Member

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    If you try and envision the absolute worst cases…

    Financially: Could you be forced to sell the Tesla? Could you be forced to sell your house? Could you somehow end up in debt even if you sell both the Tesla and the house?

    In such a scenario, could there be members of your family in need of financial help? Members of family that you would want to help out? Could there be friends in need of financial help that you would want to help out?

    How are the risks with regards to climate change? If San Antonio were to get rainfall in excess of what climate scientists refer to as a thousand year event – how is your house situated? Could your house get flooded? What if somehow your Tesla gets flooded in such an event?

    What would happen if San Antonio were to get hit by a Hurricane stronger than anything previously on record?

    What are the risks here? And do you feel ok with them?
     
  5. Bardlebee

    Bardlebee Member

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    Wow! I never thought of some of these questions, I am glad I opened this thread!

    When it comes to emergency funds (losing employment or loved ones need help) I felt I had that under wraps, but I never thought about natural disasters. One other thing I will be doing before "the day" is speaking with a financial planner like Mnlevin and talking to them about me selling my stock. I have never owned stock beyond TSLA and SCTY in a great amount, so taxes wise its concerning to me how much they will be. They are all a year or old, so that makes them long term stock I think.

    I will have to think about all these questions, thanks!
     
  6. Gwgan

    Gwgan Almost a wagon

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    Given your interest in cars you are probably talking about an optioned/expensive MS, yes? Car loans are very cheap now and your mortgage is probably a good rate but not as good. IMO: Paying off your mortgage faster is the best use of your money, unlike a car that is an investment; if you double your mortgage payments can you still afford the car? Not paying too much for any car but instead financing as much as possible is the second best use (you need reliable transportation, yes?), especially one with such a good future value; too bad the Tesla financing is not available in TX. Best use of those TSLA shares is to keep them until retirement—they’ll be worth several Teslas by then. Is it ok if your first Tesla is not an optioned-out P85+ but a “plain” sedan? That could be your path to less worry and more than satisfactory enjoyment.
     
  7. Bardlebee

    Bardlebee Member

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    The Tesla I am considering is going to be 97k total, before the tax rebate which will probably be countered by taxes from my stock. This is something again I am going to talk to a professional about.

    With the Model S I am still able to pay double payment on not only my house but my future Tesla as well. So, payment wise its not that big of a deal. I financed my home when rates were still low so I am thankful for that. My "Master Plan of Tesla Buying" is to pay both the Tesla and house off as soon as possible. Besides, the Tesla, I don't spend my money on anything but paying off any debts I have. I find financial stability a lot more appealing then buying new toys or things I don't need, if that makes sense. I will buy new furniture from time to time of course and do upgrades to the house, but for the most part my lifestyle is very low key.

    To give you a picture. I plan to have a Tesla payment of no more then 700 a month. If I have to save more so be it. Currently my monthly house payment is also 700 (my wife pays half as well). So my plan is to pay close to 2000 a month on both per month. The only reason I am not sinking 4k a month into my house is because I am saving for the Tesla. Haha. So, I should have the Tesla payed off hopefully in 2-4 years as opposed to the full 7 years.

    But as above people have noted natural disasters can happen. I have savings for 6 months out in case of unemployment. But I didn't think of other risks. :)

    My Tesla: Blue, Pano Roof, Leather, 85kwh non-performance, tech package, audio package, sensors, lights, interior lights.
     
  8. Neech

    Neech Member

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    #8 Neech, Dec 15, 2013
    Last edited: Dec 15, 2013
    First of all, don't listen to your family. It sounds like you have spent a lot of time researching and learning about Tesla and they likely have not. Therefore, their input is biased to ICE experience alone. Many people I know just can't seem to grasp a car not using gas. Secondly, consider what you will save by not buying gas, oil changes, replacing any number of parts that break down. I believe the MS motor has only 11 moving parts vs. about a hundred in an ICE. With the MS you mainly have to worry about burning up the tires too fast ;-) Thirdly, Elon is committed to making a high-quality car, traditional automakers not so much. Fourth, no carbon monoxide pollution spewing out of a tailpipe is a huge benefit as far as I am concerned.
     
  9. Bardlebee

    Bardlebee Member

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    So this probably wasn't clear earlier (because I didn't say it) I am very concerned about global warming and one of the main reasons I am getting the car beyond the points I have said now is to create awareness that electric cars can be real cars. And not just real cars, but as good if not better then ICE cars. When I talk to my friends and family, they don't judge me saying they don't trust electric. Thankfully they have been nice enough to ask questions about how far it goes, what if you run out of electricity, how many miles before the batteries are dead permanently, etc. They are surprised to find out a LOT of positive things that they have not heard.

    I do not equate the cost savings from the gas/oil changes/repairs. Simply put, if I buy a car more then 20k, I am not saving money. I kind of already written this off as an item I just want and that its just not a good financial choice, but taken to the extreme the same thing could be said about a lot of things. It is simply a self fullfillment choice and the only pause I have now is my frugal side wondering if I could have done something different. Will I be here 5 years from now thinking I could have used that money on a smarter investment? Sure. Will I be happy with the choices I make in the next few months? That is what I am trying to decide.

    It also helps that it is a very safe car, I plan to have children in a few years and it gives me comfort to know they will be riding in it, to be honest. And I am not just telling myself that to convince myself I need the car either. :)
     
  10. AlMc

    AlMc 'Senior Moments' member

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    I have read all the entries and admire that you are weighing all the pros and cons and not making this an impulse decision. It is also good that you can lay out your entire situation with a financial planner that you will be meeting with soon. However, you noted this is not only a financial decision but an emotional one as well (clean energy/safety). If it were entirely a financial (head) decision I would tell my son to pay off the mortgage and get a used model S or a brand new 'E" in 3 years. If you feel very strongly about the EV revolution I would suggest
    looking at a Prius/Volt now and to trade it in on that used S or X or 'E' in 3-4 years. If everything goes very well in three years, solid retirement savings, paid off mortgage (maybe you will need a bigger house as your family grows?) then I would reconsider whether I would want a new S or X.
     
  11. abasile

    abasile Independent Software Eng.

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    One way or another, sooner or later, unless life takes an unexpected turn for the worse (may God forbid that), it seems that you will be purchasing a Tesla vehicle. :)

    Being a debt averse person myself, my thought would be, why not live as frugally as you can, pay off the house first, then save up and pay cash for the Tesla vehicle? (Of course, at all times, make sure to maintain an emergency cash reserve, and by all means do not keep a significant amount of money tied up in any single stock.) With you and your wife both having decent incomes, this should not take very long. If you are concerned about global warming (as I am), then perhaps you can try to drive as little as possible until you get the Tesla. Ride a bicycle, walk, take public transportation, etc.

    Personally, I'm driving a 2011 LEAF until our family is prepared to pay cash for a used Tesla.
     
  12. purplewalt

    purplewalt Active Member

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    First off, I am also in Texas, and I would love to see you in a new Model S.
    And I am also quite a bit older than you, have been a life-long saver and decided to purchase a new Model S in June after sitting in one, but never having ridden or driven one.
    My (jittery) test drive was the day I picked the car up.

    I also have some TSLA stock, and don't plan to sell it in the foreseeable future.
    In my opinion: When Supercharger Network is fairly in place, Gen 3 is introduced and on the street, and pick-up Trucks are being produced, I can see TSLA really being a highly valued holding.

    In response to your question:
    Buying a car is a fundamental decision: one needs a car to get around and go to work, buy groceries, drop and pick kids up from school, travel.
    Buying a luxury car is an emotional decision.
    Financially you will be taking both a risk and greater possible financial loss should you decide to sell it.
    But you have no greater Truth in your life than your emotions.

    You met, dated, proposed and married your wife. That was part of your emotional Truth. She is the woman you wanted to spend the rest of your life with.

    If you have kids or are planning on having kids, a college education might be something that they might need some financial help with.
    Paying off your house early would almost be the last thing I would do: you can still deduct the interest from your Federal Income tax. Few things are still deductable: that is one of them.
    Cost of financing the car can be minimized, and there are multiple Options that you might also want to look at, most car loans would be lower interest rate than a mortgage.

    So:
    Go and test drive the car today.
    Enjoy the car, ask questions about the car that the Tesla employee may be able to answer. (This is Texas, and there is a lot of things they cannot respond to.)
    Learn if buying a Model S is part of your Truth.
    Ask if there is someone (Tesla employee) in Colorado you might be able to speak with (telephone call) to answer the unanswered questions.

    Be open to the possibility that waiting for a Gen 3 might make better long-term financial sense, not just for today and now, but also for your family's long-term financial benefit.
    Be open also to possibly purchasing a slightly used Model S, possibly even a used S60 (depending on how you anticipate using the car), so you haven't spent quite as much.
    (I know someone who has a 40, and they are happy with it, as they never plan to use it for travel, just in-town, so a 40 or 60 might be a possibility for you too. Should you want to use the car for significant travel, an S85 is the only car I would consider.)
    Several people on this forum have come to that conclusion, and have saved some significant money off of purchasing a new Model S.

    Then:
    Can you bear being (even more) patient?
    Do you need to have a new Model S right now?
    It is an incredible car, and the test drive may seal the deal for you.

    Good luck.
     
  13. PokerBroker

    PokerBroker Member

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    #13 PokerBroker, Dec 15, 2013
    Last edited: Dec 15, 2013
    IMO the beat thing you can do at 28 is plan for your future. At about your age I made that transition in thinking, it sounds like you've been on that path too. I upped my 401k contribution to 15% so I was maxing out the federal allowable amount of $15,500/yr tax free (I believe it's more now). I bought an affordable home in Ohio and I "splurged" a bit at the time on a nicely equipped Taurus, still conservative and not very impactful on cash flows.

    Five years later (now 33) my home and Taurus are paid off and my 401k is bursting at the seams for my age. I comfortably bought myself a certified pre owned Roadster as a toy and have met an amazing woman that I plan to start a family with with ultimate financial security.

    Looking back, I could have afforded a car like the Model S five years ago but I doubt I would be in the position I am today financially if I had. I'm glad I waited.

    Keeping a mortgage for tax deduction purposes is a myth IMO. Plain and simple, on the front end of a mortgage, you don't save enough on taxes to offset the interest paid over the course of the year. You might save $3000 in taxes but paid $10,000 in interest over the course of the year. Also for me, freedom from a mortgage, both financially and emotionally, is beyond compare.
     
  14. AlMc

    AlMc 'Senior Moments' member

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    +1. Besides my marriage to a wonderful woman and the birth of my child, there is nothing like the feeling of having paid off my mortgage.
     
  15. bonnie

    bonnie Oil is for sissies.

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    Disclaimer: Don't listen to my advice. Everyone here is much wiser to me. Waiting and being financially responsible absolutely makes the most sense.

    Okay, moving on. There are certain things in life that make life fun. It might be a once-in-a-lifetime trip or it might be a Model S. We don't only work for financial security. (Well, some of us don't. I don't.) YOU have to decide if owning this car is one of those things that will bring you joy every day. What's that worth to you? Would you buy the Model S today if you knew you only had 10 more years to live? As someone said in another thread, "Every day I put off buying this car is one less day of my life that I get to drive it."

    You have permission to do something fun. You go to work everyday. You're responsible with your money. Only you can decide how you want to use that money. Great advice in this thread. But personally, I've lived my life by mixing a lot of fun in with the "be responsible" stuff and somehow it's all worked out. No one would have told me to have made the decisions I made & in retrospect, I would not go back and change any of them. So if you can find a place where your head and your heart align, do that. And don't look back, don't second guess yourself after you've made the decision.
     
  16. Larry

    Larry Member

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    What she said 100%
     
  17. Mario Kadastik

    Mario Kadastik Active Member

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    Well I'd say it this way. Would you rather live your life safe and savings and debt free until you are 60 to then possibly enjoy the benefits you've accrued over what is left of your life with unknowns on your health etc? You might kick the bucket any day (freak accident on the sidewalk, what not). I'd say that being free of debt is nice and cozy, but it shouldn't be an absolute must if you can hedge that debt somewhat. I've financed my house and I always finance car purchases. The financing adds very little overhead (usually the percentages are small and the timeframes of 5-years are such that the accrued intrest is marginal). So instead of throwing your money at a thing and then having it locked up in that object you can finance it and make better use of the funds or have a safety margin for real unexpected situations that might affect you temporarily. Now to make sure the debt doesn't become a burden one should always be insured, both the object of the debt as well as your income (i.e. life insurance, disability insurance etc). This way the debt will be paid off if something happens and you won't have liabilities yet you will be able to enjoy your life while you are able to do it.

    In hindsight most people regret things they didn't do far far more than the things they did. If you can afford it without breaking bank and can still save up and this is a car you want, then I'd go for it. It'll make you happy and give you an experience over the next years and that's worth far more than the money. And also indeed keeping the TSLA stock is probably prudent as in a decade it may well be a 10-bagger if Tesla becomes the dominant car manufacturer and energy company that it's looking to become.

    Oh and I'm 32, have my second house (left the first for my ex-wife) and have always driven the cars I love and want. And I inherited from my parents nothing, it's all been worked for all by myself and I prefer to enjoy my life instead of being fully frugal and hopefully enjoying it when I'm 60. I might not be around when I'm 60. And I'd regret not enjoying it while I could...

    That said, I also keep saving money for the future, but at my age I can be more risk averse and spend more on living in the now.

    - - - Updated - - -

    Oh and I forgot to mention that I really liked Steve Jobs's Stanford speech where he mentioned that one should live their life in such a way that if you ask in the morning in front of mirror from yourself, that if today is the last day of my life, would I still do what I plan to do and if the answer is no too many times in row, then change something. Well that same thing goes for general enjoyment of life as well. One shouldn't go on a total spending spree and be broke in 1 year, but if you can afford it without going broke and the only thing holding you back is being debt free, then this really shouldn't keep you back. Remember that future money is worth less than todays so making payments on the car will on average be flat (interest vs inflation is in the same ballpark). And cars depreciate fast, better to finance and spend little by little on it...
     
  18. Grendal

    Grendal Active Member

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    Since you already exhibit a strong financial sense and are already making the proper moves with your finances then I'd have to go along with Bonnie and others that are saying to live your life. I don't think with your sense of money that you are going to go astray. That said, I'm waiting until 2015 to get my Model S. I am still working the stock market and hope to have made enough there to purchase my Model S outright from the profits. I am on track to do so.

    Good luck.
     
  19. AlMc

    AlMc 'Senior Moments' member

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    Well, now you have lots of opinions. Hope you can work through all this. Let us know how your test drive goes and what you finally decide. As even asking this type of question shows you are a very well grounded individual, whatever your decision, it will be well thought out and the right one for you. Good luck!:wink:
     
  20. gene

    gene Active Member

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    What Bonnie said plus this: I am 57 and I have had my S for 9 months, I love it! When I am visiting Los Angeles I see lots of Model S' around. Most are driven by people seemingly a bit younger than me. When I see a late 20 or 30 something year old driving a Tesla, I think to myself, "damn, that lucky guy, wish Tesla was around when I was 30!". You are obviously financially responsible. The S makes a good family car, and if you do buy it, you'll still be very responsible in all the other ways. Live a little!

    And one last thing. You know yourself better than any financial advisor. I have done very well financially without the advice of some "advisor" (they tend to be very conservative). Your gut feeling is worth 100 advisors.
     

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